| Accidents Impact on Insurance |
| Written by Fred McConnell | |
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Car insurance, or any insurance for that matter, is essentially an odds-based bet. Basically you and your insurer are betting on whether you'll get in an automobile accident, with the odds determined by your previous driving history and other factors deemed relevant to your insurance risk by your insurer.
Your premium, the amount of money you pay to participate in the bet, is determined by the risk of loss you pose to your insurer. That's why when you get in an automobile accident, your premium usually goes up, as the insurance company now figures that you're at a greater likelihood of getting in an accident. Each insurance company has its own surcharge schedule, but in general an accident can increase your monthly premium by anywhere from 10 to 30 percent, according to industry experts. That's why when buying car insurance, it's important for consumers to inquire about their insurer's surcharge schedule. After an accident, claims adjusters will investigate your accident, and based on their findings, other officials with your insurance company will determine, what, if any premium hike is appropriate. Not all accidents result in an increased premium, many insurers have adopted an "accident forgiveness" plan that gives drivers a pass on their first accident. Also, many insurers will not increase premiums if the damage caused by the accident does not top $1,000. One of the factors that determines whether your premium will increase is whether the accident was your fault. In general, if the accident was not your fault, i.e. if you're rear-ended by another vehicle, your rates will not go up. Usually, if you're given a traffic citation as a result of an accident, you'll be considered to be at fault. If both drivers are found to be at fault, both driver's rates will likely go up. For single vehicle accidents, you'll most likely see a higher premium unless the accident was caused by road debris or a collision with an animal. Conversely, if the accident was your fault, a rate increase may be appropriate, depending on your insurer's underwriting rules. If there are injuries to a driver or passengers as a result of the accident, chances are that your premium will go up. Medical expenses often result in big payouts by insurers, so if you get an accident with injuries on your driving record you can be sure that insurers will figure that into their risk calculations concerning your insurability. One factor in an accident that absolutely, positively result in an increased premium is intoxication. If you were under the influence of drugs or alcohol at the time of the accident, your insurer will consider it a "major violation" and enact a very sharp increase in your premium, or the insurer may even drop your coverage. Add this to the legal fees and fines you'll be paying as a result of your DUI and you'll see that driving under the influence is too great a risk for you to take under any circumstances. If you've had more than one accident over the past three years, expect your rates to go through the roof. Multiple wrecks demonstrate that you're a big insurance risk and insurers will use this to charge you higher rates. Most accidents will only stay on your driving record with your insurer for about three years. Afterwards, in most jurisdictions, the accident becomes non-chargeable after that time has elapsed. If you feel that your insurer has unjustly hiked your premiums or cancelled your policy after an automobile accident, you can appeal the action to your state department of insurance. This process can be quite lengthy and expensive however, so it may be easier just to switch to another insurer if you feel like you're being hosed by your current company. Even if your insurer increases your premium after an accident, you're not necessarily locked in to paying higher monthly rates. If you choose, you can shop around with other insurers to see if another company will offer you a more competitive rate. Comparing insurers is now easier than ever before thanks to the many rate quoting sites available on the Internet. |
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